China: Consumption risks under stable unemployment – Standard Chartered

Standard Chartered economists Hunter Chan and Shuang Ding highlight that China’s urban surveyed unemployment rate has remained in a 5.0-5.4% range over the past three years, yet broader labour underutilisation has risen. They estimate a 7.1% underutilisation rate in 2024 and argue that unstable jobs, income and limited social protection are weighing on household consumption growth.

Underemployment and consumption pressures

"China’s urban surveyed unemployment rate has hovered in a narrow 5.0-5.4% range over the past three years, despite slower growth momentum, a prolonged property downturn and elevated external uncertainty."

"Meanwhile, persistently weak consumer confidence, soft consumption growth and elevated youth unemployment suggest the headline measure may not have fully captured job-market challenges, particularly the rise in discouraged workers and underemployment."

"The broader labour underutilisation rate, including the unemployed and those who have stopped looking for work because they believe no jobs are available (similar to U-4 in the US), reached as high as 7.1% in 2024, according to our estimate."

"Meanwhile, although flexible workers (such as delivery riders, ride-hailing drivers and gig workers, estimated at 280mn in 2025) are counted as employed, they often face lower income stability, weaker labour protection and incomplete social security coverage compared with traditional employment, likely dampening consumption appetite."

"We believe better labour protection and social security coverage for flexible workers can help reduce precautionary savings, while vocational training and reskilling support can help mitigate the shock from economic transformation and AI advancement."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)